Judge Randolph M. Hammock, Case Number: 22STCV10600, Date: 2025-03-07 Tentative Ruling

Plaintiff Lineage Logistics, LLC, successor in interest to US Growers Cold Storage, Inc., brings this action against Defendants Stellar Group, Inc.; Hill Phoenix, Inc.; and Safeco Insurance Company of America. Plaintiff alleges that it entered into a written construction contract with Defendant Stellar as a contractor for the design and construction of ultra-low charge refrigeration units. In turn, Defendant Stellar subcontracted aspects of the project to Defendant Hill Phoenix, Inc. Plaintiff alleges the refrigeration units exhibit continued failures and that Defendants have failed to repair them. Plaintiff brings five causes of action: against Stellar for (1) breach of contract and (2) express indemnity; against both Stellar and Hill Phoenix for (3) negligence and (4) negligent misrepresentation; and (5) to enforce claim on License Bond against the surety, Safeco Insurance Company.

If a plaintiff wishes to amend a complaint after the answer has been filed or after the demurrer has been filed and after the hearing on the demurrer, or if he or she has already amended the complaint “of course,” permission of the court must be obtained before the amendment will be allowed. (CCP §§ 473(a)(1), 576.)

Motions for leave to amend the pleadings are directed to the sound discretion of the court. “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading . . . .” (CCP § 473(a)(1); see CCP § 576.) Policy favors liberally granting leave to amend so that all disputed matters between the parties may be resolved. (See Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428.) Absent prejudice to the adverse party, the court may permit amendments to the complaint “at any stage of the proceedings, up to and including trial.” (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761 [internal quotes omitted].)

Although denial is rarely justified, a judge has discretion to deny leave to amend if the party seeking the amendment has been dilatory, and the delay has prejudiced the opposing party. (Morgan v. Sup.Ct. (1959) 172 Cal.App.2d 527, 530; see also Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490). An opposing party is prejudiced where the amendment would necessitate a trial delay along with a loss of critical evidence, added preparation expense, increased burden of discovery, etc. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488.

Ordinarily, the court will not consider the validity of the proposed amended pleading in ruling on a motion for leave since grounds for a demurrer or motion to strike are premature. The court, however, does have discretion to deny leave to amend where a proposed amendment fails to state a valid cause of action as a matter of law and the defect cannot be cured by further amendment. (See California Casualty General Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 281 (overruled on other grounds by Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390).)

Hill Phoenix moves for leave to file a First Amended Cross-Complaint. The current Cross-Complaint asserts causes of action against Defendant Stellar Group, Inc. for (1) implied indemnity, (2) comparative indemnity, (3) equitable indemnity, (4) contribution, and (5) declaratory relief. By the proposed amended Cross-Complaint, Hill Phoenix will add existing party NXTCOLD, LLC as a Cross-Defendant to each cause of action. Hill Phoenix will also add additional causes of action against NXTCOLD, LLC for express indemnity and breach of contract. (See Golodnitska Decl., Exh. B.)

The causes of action against NXTCOLD are based on a 2017 Licensing Agreement entered between Hill Phoenix and NXTCOLD governing NXTCOLD’s “patented technology, know-how, and data relating to self-contained industrial refrigeration systems.” (Mtn. 2: 12-15; Golodnitska Decl., Exh. A.) Hill Phoenix contends this Licensing Agreement requires NXTCOLD to indemnify it for the claims raised against Hill Phoenix in the underlying Complaint.

Cross-Defendant NXTCOLD opposes leave to amend. NXTCOLD contends that the motion for leave is dilatory, and that Hill Phoenix has not justified this delay in the moving papers. NXTCOLD also notes that trial is set for August 11, 2025. These points are well-taken.

Under CRC Rule 3.1324, a plaintiff seeking leave to amend must provide (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reasons why the request for amendment was not made earlier. (CRC, Rule 3.1324.)

Here, the motion and declaration in support of the motion do not comply with Rule 3.1324, as they do not state when the facts giving rise to the amended allegations were discovered, nor the reasons why the request for amendment was not made earlier. (See Golodnitska Decl., generally.)

It is noted that NXTCOLD has been a party to this action since September 21, 2022, when Stellar Group, Inc., named it as a Cross-Defendant. In addition, the Licensing Agreement underlying the proposed amendment was entered into in 2017. Thus, it is unclear why the request for leave is sought now, only five months before trial.

This court is mindful of the “policy of great liberality in allowing amendments at any stage of the proceeding so as to dispose of cases upon their substantial merits.” (Bd. of Trustees v. Superior Ct. (2007) 149 Cal. App. 4th 1154, 1163.) But here, based on the moving party’s failure to explain the delay, this court can only conclude that it was dilatory in seeking leave. In addition, given the impending discovery cut-off and trial date and the nature of the claims in the proposed amended cross-complaint, there is a real risk of prejudice to the opposing party if leave is permitted at this time